A forecasting model for state expenditures

Jane Leuthold

Public Choice, 1988, vol. 56, issue 1, 45-55

Abstract: In this study, the median voter model is applied to the problem of predicting state public expenditures in four major categories: human services, elementary and secondary education, higher education, and health services. Demand functions for public services are derived within a formal utility-maximizing model. The resulting model is estimated using time-series data for a representative state and the model is used to predict state spending for fiscal year 1985. The results of the estimation are consistent with the predictions of the median voter model and the forecasts correspond closely to those made by the State Bureau of the Budget. In contrast, a naive autoregressive model of state spending performs poorly. Copyright Martinus Nijhoff Publishers 1988

Date: 1988
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DOI: 10.1007/BF00052069

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